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Coach's longtime CEO Lew Frankfort, who transformed what had been a small leather goods business into a global luxury brand, will step aside next year.

The upscale purse and accessories seller said Thursday that Victor Luis will succeed him as CEO in January. Luis, Coach's head of international operations, spearheaded the company's fast growth into Asia.

Frankfort, who will remain as chairman and CEO until January, will then become executive chairman. He plans to stay in that position "indefinitely," he said in an interview Thursday with The Associated Press. "I don't have a fixed retirement date," he said. "At the same time, we need to prepare the business for the next generation, and Victor is the perfect leader."

Frankfort, 66, joined Coach in 1979 as a vice president of business development. Named chairman and CEO in 1995, he shepherded Coach through an initial public offering in 2000 and oversaw the company's growth into a global luxury business. Coach, which generated revenue of $4.8 billion in its latest fiscal year, now runs more than 500 stores in North America and has locations around the world.

Luis, 46, became president of Coach's international business a year ago after joining the New York-based company in 2006. Coach on Thursday appointed him president of the company and chief commercial officer, and named him to the board.

The management change comes as Coach grapples with a challenging global economy. It just finished a muted holiday season marked by steep price cuts by competitors. It's also facing new rivals, including Michael Kors Holdings Inc., which is cultivating a loyal following for the designer's trendy handbags.

In Coach's second fiscal quarter, which ended Dec. 29, revenue at North American stores open at least a year fell 2 percent. In the company's first quarter, the metric, an important one for retailers, rose 5.5 percent. In Asia, meanwhile, growth has been strong in China but sluggish in Japan.

Shares of Coach have lost 35 percent of their value over the past 12 months. The stock fell 56 cents, or 1.2 percent, to $48.21 in afternoon trading.

"They have to put out more fashionable product," said Brian Sozzi, chief equities analyst at NBG Productions. In that arena, "Kors is a clear leader."

Frankfort defended Coach, saying the recent holiday quarter was just "a moment in time." He emphasized again Coach's plans to further develop a lifestyle brand focused on accessories.

As part of Coach's plan to rev up growth and differentiate itself from competitors, it's trying to make its stores more inviting by opening shoe salons inside its shops, highlighting an expanding footwear collection. It's also expanding into other key categories, including coats and scarves, while creating a head-to-toe collection that will start to show up in stores this fall. And it's reaching to the past to inspire purse shoppers. Coach last year launched its Legacy collection of handbags inspired by classic styles in the company's archives.

"Coach is a great company with exceptional brand and business equities and a strong and seasoned leadership team," said Luis in a statement. "Together with Lew, we will build upon the company's strong foundation, leveraging the global opportunity, while continuing to evolve the Coach brand."

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AP Business Writer Bree Fowler contributed to this report in New York.